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Copyrights: a new work-for-hire rule.

If you hire contract programmers, documentation writers, or other "work for hire" employees, this summer the Supreme Court may have handed you a ticking time bomb. Unless you have a contract that calls for an explicit transfer of copyright ownership, says the Court, the intellectual property you bought may not belong to you.

That's pretty much the bottom line of a landmark case, picturesquely titled Community for Creative Non-Violence v. Reid, that the Supreme Court decided in June. The Reid case finally clarifies a murky area of law: Who owns the rights to works produced by people who fall somewhere between regular employees and independent contractors? There's never been much ambiguity about copyright ownership at either end of the spectrum: Property created by full-fledged employees has always belonged to the employer, while works created by arms-length contractors (independent developers, free-lance writers and artists, code library vendors, etc.) has belonged clearly to the original author.

But copyright ownership blurs when companies bring in outside specialists who function as quasi-employees--a situation that's especially common in software development. Many companies have tried to write so-called "work for hire" contracts that transfer copyright ownership, but these contracts have a tendency to fall apart in court (at least four different federal courts have wrestled with work-for-hire cases recently, significantly adding to the confusion). Now the Supreme Court has issued a definitive formula that simply eliminates the whole notion of de facto employees. According to the Court, companies own only the work of people who are genuine employees; everything else is up for grabs.

How does the Court's new ruling affect software developers who hire free-lancers and contract programmers? "Most companies go by a rule of thumb--if they pay for it, they own it," says Anne Fontaine, an intellectual property rights lawyer who has watched the Reid case closely. "That's not a principle that holds true any more. Independent contractors now probably hold a few more marbles."

Fontaine points out that it's still possible for an employer to acquire full copyright ownership from an independent contractor, but now the courts will probably look for evidence of an explicit copyright sale. "The advice we're giving our clients," she says, "is to write a separate assignment of copyright contract that's particular for each work, so that it appears that an actual bargaining process took place." Handshake deals, open-ended assignments, and boilerplate clauses in generalpurpose contracts now may be an invitation to a lawsuit, she notes.

'The Court's decision makes the actual hiring and contracting process more complicated," Fontaine adds. "still, it's a good decision because

there's finally a fairly definitive rule. That's an improvement."
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Copyright 1989, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Date:Aug 1, 1989
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